Microsoft sued for $5 billion

MattAndrejczak

WASHINGTON (CBS.MW) -- Former Microsoft employee Rahn Jackson says he told the company's president and chief executive Steve Ballmer in a phone conversation a few months ago that he didn't want it to come to this. But it has.

On Wednesday, Jackson was one of seven former and current African-American employees of Microsoft
MSFT, -1.70%
to file a $5 billion lawsuit in U.S. District Court against the software giant, alleging racial discrimination in pay, promotions and compensation, as well as wrongful termination and retaliation.

The suit, which seeks class-action status on behalf of at least 400 Microsoft employees, builds on a complaint Jackson originally filed last June.

Speaking to a cramped roomful of reporters at the National Press Club, trial lawyer Willie Gary, the plaintiffs' lead attorney, charged Microsoft with fostering a "plantation-like mentality" that must be stopped.

"Microsoft is not the company it purports to be," said Gary, a Florida lawyer who is also representing seven African-Americans in a similar $1.5 billion suit against Coca-Cola. "It's a whole different ballgame behind closed doors. ... We're not afraid of them."

In a twist, the suit will or will not be certified by federal Judge Thomas Penfield Jackson. Last summer, Jackson ordered Microsoft to be split into two companies in a landmark antitrust case. That ruling is being appealed.

In a prepared statement, Deborah Willingham, vice president of human resources at Microsoft, said the company has not had an opportunity to review the suit but said it is strongly committed to workplace diversity.

"Microsoft has a zero tolerance policy towards discrimination in the workplace," she said, adding how the company has invested $100 million in recent years to stimulate interest among minorities and women in the field of technology. "We take any allegations of discrimination very seriously and immediately investigate any concern that is raised."

According to the lawsuit, only 2.6 percent of Microsoft's 21,430 employees in 1999 were African-American and represented a mere 1.6 percent of its 5,155 managers.

Willingham pointed out the figure of 2.6 percent is on par with a September 2000 report released by the Congressional Commission on the Advancement of Women and Minorities in Science, Engineering and Technology Development.

The study revealed African-Americans comprise 3.2 percent of the technology, science, and engineering work force in the most recent period for which information is available.

At the press conference, Jackson said he joined Microsoft in 1992 because he truly believed the Redmond, Wash.-based tech leader was a great company.

But after he was turned down for several promotions despite working for a six-person division that generated $50 million in revenue selling software and related services to the Army, Jackson said, he arrived at a much different conclusion: the company was racist.

"This is rampant all across Microsoft," said Jackson, who also learned of the company's alleged discrimination practices from other African-American employees through an internal e-mail address. "They ignore issues they cannot address."

The 36-year-old Jackson, who said he believes he was paid much less in stock options and bonuses than other, less-qualified employees at Microsoft, has worked in the technology industry for 17 years.

He is presently employed as an account manager with one of Microsoft's archrivals, Sun Microsystems
SUNW, -0.60%

Gary, a senior partner at Gary, Parenti, Finney, Lewis, McManus, Watson & Sperando, said he and his client hope Judge Jackson will certify their class-action suit within 90 days so they can go to trial in a year.

On Dec. 12, Microsoft agreed to pay $96.9 million to settle an 8-year-old class-action suit bought by a group of longtime temporary workers meant to cover the fringe benefits offered to the company's full-time employees, such as stock options, health insurance and retirement benefits.

Intraday Data provided by SIX Financial Information and subject to terms of use.
Historical and current end-of-day data provided by SIX Financial Information.
All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only.
Intraday data delayed at least 15 minutes or per exchange requirements.